House GOP charges ahead on tightfisted budget plan

By ANDREW TAYLOR | March 21, 2012 | 5:47 PM EDT

House Budget Committee Chairman Rep. Paul Ryan, R-Wis., holds up a copy of his budget plan entitled "The Path to Prosperity," Tuesday, March 20, 2012, during a news conference on Capitol Hill in Washington. (AP Photo/Jacquelyn Martin)

WASHINGTON (AP) — Republicans and Democrats on a key House panel squared off Wednesday over a controversial GOP budget plan to sharply cut federal health care spending and safety-net programs like food stamps as the chief means to wrestle trillion-dollar-plus deficits under control.

The GOP plan is nonbinding but calls for repealing President Barack Obama's health care plan while transforming Medicare into a voucher-like system in which the government subsidizes purchases of health insurance on the private market instead of directly paying doctor and hospital bills.

The Medicare proposal won't be the subject of follow-up legislation under the arcane budget process on Capitol Hill. Nor do Republicans plan to pass a detailed proposal to reform the nation's complicated, loophole-ridden tax code this year.

But other elements of the measure are likely to advance this spring — at least in the GOP-dominated House — as a 10-year, $261 billion package of cuts to replace deep, across-the-board spending cuts slated to hit the Pentagon and domestic agencies in January. Those cuts were required under last year's budget pact because of the failure of the deficit "supercommittee" last fall.

This spring's substitute cuts are likely to target, among other programs, food stamps, federal employee pensions, farm subsidies, and a proposal to require higher-income Medicare beneficiaries to pay higher premiums. Some of those ideas have been marched through the House before, only to die in the Democratic-controlled Senate, though the agriculture and food stamp cuts haven't — and may prove troublesome.

The Democratic-controlled Senate has no plans for a companion measure.

The budget measure also would force new austerity on an upcoming round of funding bills for domestic agencies, breaking faith with spending limits carefully negotiated with Obama and Senate Democrats just last summer.

A Budget panel vote on the broader GOP budget measure is coming Wednesday night with a vote by the full House expected next week.

Democrats say the GOP budget's Medicare proposal would dump a steadily increasing share of health care costs on future retirees forced into the new system, starting in 10 years. And they decried sharp cuts to food stamps, school lunches, welfare, Pell Grants, transportation and education.

Republicans praised the plan for taking on deficits that threaten to swamp the economy if left unchecked, while Democrats assaulted it for awarding big tax cuts for the wealthy and forcing seniors to pay a far larger share of their health care costs.

Top Budget panel Democrat Chris Van Hollen of Maryland warned that the measure would indiscriminately slash spending while delivering tax increases to the wealthy.

"The choices made in the Republican budget are simply wrong for America," Van Hollen said. "It is not bold to provide tax breaks to millionaires while ending the Medicare guarantee for seniors and sticking seniors with the bill for rising health care costs."

The GOP plan, drafted by Budget Committee Chairman Paul Ryan, R-Wis., would use sharp cuts to domestic programs to shrink U.S. deficits to $3.1 trillion over the coming decade, less than half the size of those proposed by President Barack Obama last month.

But it does so in ways that would be unprecedented — and unrealistic — by relying on assumptions like cutting transportation outlays from $93 billion this year to just $50 billion in the 2013 budget year starting in October. Its cuts to the Medicaid health care program for the poor and disabled would total more than $800 billion over the coming decade, Van Hollen said.

The measure cuts even more deeply than last year's GOP blueprint in an apparent appeal to GOP tea partyers unhappy with the Republican Party's performance on the budget. It also seeks to win over voters frustrated with out-of-control deficits. Proposals like transferring the food stamp program to the states and allowing them to impose time limits on benefits or work requirements are red meat for conservatives, as is a tax proposal to lower the top individual and corporate tax rate to 25 percent, financed by rolling back a variety of tax breaks.

"For years, both political parties have made empty promises to the American people. Unfortunately, the president refuses to take responsibility for avoiding the debt-fueled crisis before us," Ryan said. "The American people deserve real solutions and honest leadership. That's what we're delivering."

The annual budget debate is conducted under arcane rules. The main budget document, called a budget resolution, is a nonbinding measure that sets the parameters for follow-up legislation on spending and taxes. Even though its broader goals usually are not put into place, it is viewed as a statement of party principles.

Ryan's plan is more of a campaign manifesto than a governing document. It is a dead letter in the Democratic-controlled Senate and is not even a starting point for a dialogue with Obama. For one thing, it breaks faith with last summer's hard-fought budget pact, seeking to impose new 5 percent cuts on domestic agencies whose operating budgets will be written by the Appropriations committees later this year.

"It would be difficult to overstate the radicalism of the domestic cuts proposed by the House budget," said acting White House budget director Jeff Zients. "Over a decade, the resolution would cut over $1 trillion in non-defense spending on top of the reductions the president has already signed into law."

The measure is, however, more generous to the Pentagon, calling for restoring more than half of the almost $500 billion cut from defense accounts over the coming decade by last year's budget pact. But it fails to address a $300 billion-plus hole in Medicare's budget under an archaic formula for physician reimbursements.

"Let me tell you something. I'm happy that you introduced this budget," said Rep. Bill Pascrell, D-N.J. "I'm happy to run against it — politically, economically, any way you say it — because you've handed it to us. It defines our battle."

The measure would allow businesses with fewer than 500 employees — or 99.9 percent of the nation's companies — to deduct 20 percent of their income from their federal tax bill. The measure exempts no businesses from the tax cut, leaving the door open to certain Democratic criticism that it would provide breaks to everything from hedge funds to pornography businesses that qualify.